March Madness: 5 critical (mostly) coronavirus-linked events to rock markets in first week of March

How much economic damage has the coronavirus outbreak already caused? After weeks of anxiety, reports of infections, travel restrictions, factory shutdowns, and anecdotal evidence – clearer data is coming from China and the US. The Federal Reserve is pressured to cut interest rates.

The first week of March also consists of a critical political event in the US – "Super Tuesday" and the all-important Non-Farm Payrolls report may seal the deal. 

Here is a guide to five critical events:

1) Chinese February PMIs – How hard has the virus hit?

While attention has shifted from China to Europe, the world's second-largest economy is the epicenter of the coronavirus. Around 50 million people remain in lockdown in around Wuhan and not all factories outside Hubei province have fully opened. 

Together with the extended lunar new year holidays, it has been hard to assess China's growth – or lack thereof – in the first quarter. The disease became well-known in mid-January but the full impact has been seen only in the following month. Purchasing Managers' Indexes for February are set to provide answers on business sentiment. 

Beijing publishes its official manufacturing and services sector PMIs on Saturday – while markets are closed – and Caixin's independent assessment is due out early on Monday. Economists expect a plunge of manufacturing PMIs well below 50 – indicating outright industrial contraction – and a significant slowdown in services figures. 

The publications are set to impact the market open. A moderate fall may trigger a massive relief rally while devastating figures could exacerbate the market plunge.

See Chinese PMIs preview: Coronavirus-related plunge must be deep to push markets lower

Saturday, and then Caixin on Monday at 1:45 GMT. 

2) US ISM Manufacturing PMI – Is American industry scared?

Crossing the Pacific, traders will want to see if the same trends are confirmed in the world's largest economy and any trend stemming from Chinese figures may reverse if American figures are different. 

The ISM Manufacturing PMI is the first US figure of high interest. Economists expect it to hold above 50 points – indicating expansion for the second month in a row. A drop below this level may reveal concern about the virus. 

If statistics coming out of Beijing are depressing but ISM's figures are satisfactory – stocks may recover. And if Chinese PMIs prove optimistic in comparison to signals of a contraction in America's industry – markets may turn south.

The most significant impact would be if both datasets point in the same direction. A combination of depressing figures from the world's largest economies could weigh heavily on the dollar as the Federal Reserve would be urged to cut rates. 

Conversely, signs of optimism could trigger a massive greenback comeback.

Monday, 15:00 GMT. 

3) Super Tuesday – Bernie, Biden, Bloomberg?

Members of the US Democratic Party go to the polls in 14 states on Tuesday – including large Texas and California. That will be the largest contest so far after a series of primaries and caucuses in four smaller states. Left-leaning Bernie Sanders is the lead after the initial votes – and "Super Tuesday" is the chance for centrist candidates to fight back and even overwhelm the Vermont Senator's advantage. 

Former Vice President Joe Biden – who was the frontrunner during most of 2019 – has a chance of leaping forward. It will also be Michael Bloomberg's first dip into the race. The billionaire media mogul has been sitting out of early states while spending on ads. However, he failed to make an impression in two televised debates.

The wide-open race also includes left-of-center Senator Elisabeth Warren, her moderate colleague Amy Klobuchar, and South Bend, Indiana mayor Pete Buttigieg, another moderate.

If a clear winner emerges from the vote, it has room to move markets. Investors prefer a centrist such as Biden or preferably Bloomberg, a businessman to confront President Donald Trump. Sanders' plans to nationalize healthcare and Warren's financial reform agenda are both sending shivers down Wall Street types' spines. 

If Sanders consolidates his lead, markets may tumble and the dollar may follow through. A victory for a moderate could trigger the opposite reaction. Stay tuned for a full preview from FXStreet's Joseph Trevisani.

Tuesday, results due early on Wednesday.

4) US ISM Non-Manufacturing PMI – More sensitive than usual

While the combination of Chinese PMIs and the US ISM manufacturing one are set to provide a broad picture of investor confidence in the wake of the virus, America's largest sector has the final word in PMIs. 

The services sector is not only around 70% of the economy but has also shown signs of weakness. Markit's Services PMI fell to 49.4 points in the preliminary read for February – the lowest since 2013 and reflecting contraction in a sector that has seen robust growth. Consumers have been pushing the economy forward and the sharp drop caused some alarm.

ISM tends to carry more weight than Markit when it comes to US PMIs. However, the sensitivity that markets showed in response to Markit's Services PMI makes the upcoming ISM Non-Manufacturing PMI more important than usual.

Wednesday, 15:00 GMT. 

5) Non-Farm Payrolls – Finalizing a Fed cut?

The "king of forex indicators" is always a market mover. After an impressive increase of 225,000 jobs in January, economists expect a more modest gain – yet still healthy – of nearly 200,000 positions. Annual wage growth is remain above 3%. 

Overall, upbeat figures from America's labor market may remind everybody that the world's largest economy is stil leading the way forward. As the data is for February – the first full month of coronavirus fears – it may soothe investors and allow for a dollar correction.

On the other hand, if the mood has not improved by Friday, even a minor miss could trigger the next the sell-off. For the Federal Reserve, a small disappointment may have the final word and push the bank to cut rates in March, thus sending the dollar lower.

Friday, 13:30 GMT.  

Conclusion

It is hard to exaggerate the importance of events due out in the first week of March as coronavirus fears have sent global markets spiralling. Top-tier economic figures that reflect the level of worry, compunded with significant political development and the seemingly non-virus related Non-Farm Payrolls should provide for top volatility.